What City Observatory did this week

1. There will be two HQ2, just as we predicted. Back in January, we took a close look at the Amazon HQ2 location contest. We said that the decision to build a second headquarters wasn’t simply to clone a another version of the existing Seattle operations, but to diversify the firm’s technology and talent base in a way which would enable its further evolution into new lines of business. We also said that once the firm decided to locate some functions outside its Seattle home base, there was no reason why it would choose just one city. Amazon’s decision, announced this week to choose multiple cities is exactly what we predicted:

But like any reality-TV show, there’s nothing that stops the producers from injecting a late-in-the-game plot twisting rule change. Don’t be surprised if later this year, Amazon announces that its going to have more than one HQ2

2. Road pricing is inherently equitable because it makes the buses run faster. One common objection to the idea of road pricing is that it is somehow unfair to the poor because any toll will be a larger fraction of their income than for a higher income person. That misses the key point that the poor are far less likely to drive at all, and less likely to commute during peak hours. More importantly, though, road pricing helps low income people directly by helping buses to run faster. The poor are disproportionately dependent on transit, and a new analysis from New York shows that the peak period congestion charge proposed for Manhattan would shave as much as an hour a week off the average travel times of bus commuters in Queens and Brooklyn. Right now, there’s no way they can buy a faster trip, which is why peak period road pricing is inherently equitable.

Enabling this bus go faster is the best way to improve equity in transportation

3. Detroit’s Corktown: Portrait of a diverse neighborhood. Earlier this year, we released our new CityReport America’s Most Diverse, Mixed-Income Neighborhoods. That report used data from the Census to identify urban neighborhoods with the highest levels of racial, ethnic and economic mixing. In the Detroit metro area, Corktown is one of a handful of the most diverse neighborhoods. Corktown is a good illustration of how rapidly changing neighborhoods are often the most diverse places in any metropolitan area. The public policy challenge is to make sure they remain accessible to all as they revitalize.

4. The Growth Machine versus the Homevoter Hypothesis.  Daniel Kay Hertz puts two competing theories about the political economy of urban development on the scales and ask which is the most persuasive. One is Harvey Molotch’s Growth Machine theory, that argues that land-owners, developers and industries that thrive on local population growth constitute a formidable coalition on behlaf of policies to facilitate and subsidize more growth. It’s competitor is the Homevoter hypothesis, that individual homeowners cast their ballots in ways that maximize the value of their homes, typically by reining in further development, ostensibly to minimize impacts, but with the clear effect of limiting supply and driving up prices. The evidence of systematic down zonings in many American cities over the past few decades points to the dominance of the Homevoter model.

Must read

1. Michael Lewyn’s review of “The Battle of Lincoln Park.” As City Observatory followers will know, long-time contributor Daniel Kay Hertz has a new book out on neighborhood change in Chicago. Planetizen has published Michael Lewyn’s thoughts after having read the book. Lewyn highlights how the book chronicles the way in which new middle class residents moving into the neighborhood in the 1960s and 1970s lobbied for land use and other policy changes to lower density, and exclude multi-family housing.  It was these policy changes, rather than the influx of new residents that drove displacement from Lincoln Park in subsequent decades.

2. Emily Badger on Superstar Cities and Amazon.  We’re just beginning to see the first of a flood of post-mortems on the Amazon HQ2 decision. (City Observatory will have its own nuance to add soon). The New York Times’ Emily Badger hits the main point:  it’s all about the agglomeration of talent in leading cities. Amazon went not to the cheapest place to do business, but selected two of the cities (New York and Washington) with the largest agglomerations of well-educated workers (and especially the group we call the young and restless). In theory, it would be nice if Amazon had taken its high paying jobs to some distressed community, but knowledge-based firms and knowledge workers have similar motivations:  both thrive most if their in a place where there are lots of smart firms and smart workers.

3. Jenny Schuetz on Amazon’s choices and local housing markets. For some time, Brookings economist Jenny Schuetz has pinpointed the tight connection between the location chosen for Amazon’s HQ2 and local housing markets. With the news the Crystal City and Long Island City are the likely locations, she concludes that Amazon’s site selectors have really done their homework, choosing locations, that though within expensive and constrained metro areas, are ones that allow greater density near to Amazon’s preferred sites. As she says: “high density zoning is Amazon’s friend, NIMBY residents are not.”

4. The patriarchal suburb. Angie Schmidt of Streetsblog has a well-argued essay “Single-Family Housing Upholds the Patriarchy and Hurts Moms” about the effect of car-dependent suburbs on the child-raising burden that’s effectively foisted on women. While, as the saying goes, it takes a village to raise a child, in most suburban settings there is effectively no village because households are isolated one from another, nearly all trips require cars, and children are practically barred from unsupervised walking. The key problem, Schmidt relates, is that we lack the common and communal spaces where children and their caregivers can function as groups, rather than isolated individuals.

New Knowledge

Millennials are increasingly buying homes in close-in urban neighborhoods. A newly published paper from a trio of researchers at Clemson and the Atlanta Fed–Elora Lee Raymond, Jessica Dill and Yongsung Lee–looks at where within metropolitan areas millennials are buying homes. In contrast to previous generations, young homebuyers today are more likely to purchase homes close to downtown. Raymond, Dill and Lee used data from the the New York Federal Reserve Bank on 128,000 thousand mortgages issued to first-time homebuyers between 2001 and 2016. They performed a regression analysis to estimate the relative propensity of young buyers to purchase homes within one mile of the center of the central business district, controlling for a number of other factors including income, credit score, car-ownership and student debt.  They conclude that:

We find that Millennial homebuyers consistently choose locations closer to central cities when compared to older generations when they were at the same age, suggesting that the Millennial generation’s embrace of urban areas may persist into later stages of life.

A common argument of those who are skeptical of the migration of young adults to cities is that urbanicity is mostly tied to renting, and that as Millennials increasing buy homes, they will move away. These data suggest that this generation is making different choices that its predecessors, and is more likely to buy homes in more urban locations, rather than suburban ones.

Elora Lee Raymond, Jessica Dill and Yongsung Lee, Millennial First-Time Homebuyers and Location Choice, Journal of Planning Education and Research, 2018

In the News

The New York Times “Was Amazon’s Headquarters contest a case of bait and switch: yes” credited City Observatory for correctly predicting last January that Amazon would split its much anticipated HQ2 among two different cities, they said: “At least one expert realized some time ago how the game would end.”

CityLab also reprised our analysis of Amazon’s rationale for choosing two locations rather than just one.

The Niskanen Center cited our recent commentary “Housing can’t be affordable and also be a great investment.”

NBCDFW, the Dallas television station used data from our report on the growth of city center jobs as part of a story on housing in Austin.